How to Get Private Money for Real Estate Investing, Solocast Episode #3
Mitch Stephen has been a self-employed RE investor for 23+ years. His real estate investing career started at the age of 23 when he read “Nothing Down” by Robert Allen.
REAL ESTATE INVESTOR:
Mitch, together with his wife, Tommi, and his daughter, Shannon purchased their fair share of local houses. Their company, Independence Day, Inc., has bought and sold over 2,000 properties in and about San Antonio, Tx since 1996. This company specializes in buying distressed properties with OPM and the selling of those owner financed properties.
Mitch is the author 3 books:
MY LIFE & 1,000 HOUSES:
Failing Forward to Financial Freedom
MY LIFE & 1,000 HOUSES:
200+ Ways to Find Bargain Properties
My Life & 1,000 Houses
The Art of Owner Financing
For more info about these books go to https://1000houses.com/books/
Mitch offers Online Education, Group Coaching, and one-on-one Mentorships as it relates to all the aspects of Owner Financing and owner financed properties.
Mitch forged the creation of a mass texting software, LiveComm.com to help solve problems that arise when you get numerous calls from bandit signs and other advertising efforts to sell your houses.http://LiveComm.com.
The main reason Mitch wanted this system was to reduce the number of calls from potential buyers (that asked the same questions over and over) to a group of the most qualified buyers, saving time for the sales team. This solves that and much more to streamline you selling process. Listen in to find out what a time saver this system can be for you and your sales team.
What you’ll learn about in this episode:
- Why you need to get into this business without using any of your own money
- Why the excuses about why you can’t do this business are completely bogus
- Why it’s not about you — and is about the deal
- Making people to ask you if they can participate
- How to get private money for real estate to invest in more property
- Why you absolutely need private money
- The numbers game that exists with private money
- Why begging people for their money is a backwards mindset
- Why you need to find the deal before you find the deal
- Why you need to learn to write an effective contract
- Why you need to learn how to negotiate great deals
Mitch: This is Mitch and welcome to the Real Estate Investor Summit Podcast, today we’ll gonna get you some of the private money motivation that you need. So, hang around we’ll gonna talk to our sponsors real quick and then when we come back, we’ll gonna talk about how to find private money, how to find private lenders because, private money is what makes the world go round. Stay tuned.
Alright, this is Mitch and we are back and I wanna talk to you a little about private money. Boy, I said this a lot, but am gonna say it again, because it is so true. You can go out and make a great living in the creative real estate investing strategies, any one of the strategies, but the difference between making a great living and being a multi multi multi multi multi millionaire is private money. You have to take the banks out of the equation, because you don’t wanna lose in between cycles, you need to be able to live straight through the highs and the lows, go right through all of them. And when you take institutional lenders and hard money lenders out of the equation, and you start using private money, you’ve become your own person and you can buy all the deals that you want at will. The biggest excuse I’ve heard by far, of the reasons why people, they come to me all the time and I really really would like to get into house flipping business, or the creative real estate business, but I just don’t have any money, that’s the number one excuse, the number one obstacle, the number one roadblock, you know. It’s like chicken on egg. Every investor guy that started out in this business, creative real estate investing, not all of them had any money when they came. The ones that I know come with money, lost it all because they were just too comfy, too easy. You wanna know this how to do this business right, even if you have a bunch of money, go put it on a CD and put it away and learn how to do this without any of your money and then you’ll know how this business works, you know how to deal well.
You know when you don’t have money, you are a professional deal creator. You know, when you don’t have money, you substitute your lack of funds with knowledge and expertise. You can write up a contract on a house that’s worth $100,000 for $50,000 then, you’ll gonna be in demand, because at least for a little while, you control a very valuable piece of property with a minimum earnest money contract or minimal earnest money check, and you may control sometimes rather than large profits, and they are plenty of people that would like to share that profit with you. You simply tell them, you know, “I got the deal. Someone needs to bring the money”. I think we have a match made in heaven if we can get that done.
So, if you are out there, you are waiting to have the money before you start in this creative real estate investing career, then you don’t understand the business at all in my opinion, you need to sit down, and re-figure out what you are doing, ’cause if you wait on the money, it may never come. Don’t wait on the money. Jump in and figure out how to make deals without any money and then, eventually you’ll have your own money to do your own deals that don’t depend on anyone else.
Other excuses that I’ve heard, let’s see here. “I am too young. I don’t have a track record. I don’t have experience. I have bad credit. I don’t speak English all that well. I fall bankruptcy last year. I am too fat, i’m too tall. I am too skinny, I no longer [INAUDIBLE] whatever. You know, I’ve heard it all and to tell you the truth, you are giving yourself too much credit if you’re thinking like that, and what are the things I do when I coach and mentor people, I make shifts in their minds, I change something that seems impossible to you, and I make to wear not impossible anymore, in fact, it is quite doable. So, what I wanna say to you all of you out there right now that don’t have any money to go buy some deals is just, it is not all about you, take yourself out of the equation, it is about, the deal. Private lenders wanna know, “How much are you gonna pay me if I loan you my money and what happens if you stop paying me, what do I get”?
I love to tell people when i’m talking to them. Like, this is my elevator pitch. I ask people what they do for a living, and then almost without fail, they ended up asking me, “What do you do, sir”? And I say, “Well, my name is Mitch Stephen and I help average people make above rates return on their idle money and I gave them very valuable Texas real estate as collateral. So either you get or you get. You either get the interest rate that were promised or you get a real piece of property that is worth substantially more than what you are lending, why are you interested”? You know, that is my elevator pitch. So, let’s clear this up right now. And take the emphasis of you, and start learning how to make great deals. And let those deals attract the money, so here’s a great example for you, I wanna take it way to the extreme. You should be able to get money loan to you from private individuals even if you are in a jail cell for a murder. So, let’s say you are in jail for murder and here comes–but you have access to the internet, so you are able to strike this deal, you were able to get a $100,000 house under contract for $50,000. And then, you hear the warden, coming down the hall and you stick your face up to the bars, “Hey warden, hey warden”. And he gets close to you, “I got a proposition for you, money making proposition for you, you know. I am willing to pay you x percent interest for your money, if you’ll loan me $50,000”. And then the warden looks at you and go, “I am not loaning you $50,000”. And you say, “Look, I got a house that is worth $100,000 and am gonna give you a first lien on it, if you’ll loan me the $50,000 and if I don’t pay you back like I am saying I am going to, then you’ll just take my house. And all of a sudden, the warden scratches his head and calls the guard, to you know, open cell number one and get you out of there because you gonna go and sign some paper, you know. It is not about you, it is about the deal. So, put that number one in your mind. So, who do you call on? Wow, you know everyone needs one marketer, they don’t know people with money, so that, “I don’t really know anyone that has any money”, so that is another excuse.
And first of all, you don’t have to know this people, for reasons previously stated. You just talk to people that have some wear it all, and show them the kind of deals that you have and someone’s wanna do it. You know, you can go to CPAs, you think CPAs don’t know people with money, you think CPAs would like to invest themselves? You know, there’s a certain way that you can ask or propose, you can make your proposal in such a way, that you never ask the person you are talking to for money. You make them ask you, if they can get involved, “Hey, can I have a piece of it. Can I invest with you”? There’s a way to do it and you make them ask you, if they can participate. And I love that, because it’s a whole different thing, if you ’round knocking doors and asking people if they’ll invest with you then, automatically they’ll have their defenses up, if you find a way to state your case, where you just showing them what you do, and how you do it and what you pay your investors, then suddenly, they’ll say well, “Hey, I wanna be one of those guys that makes that 8%-9% right there at 10%. I wanna be one of those guys. Can I be one of those guys”? And so, that’s really important to stop begging for money and start offering to help people. You know, there’s a lot of people out there that used to be worth twice as much as they are now, but they lost half of it in the stock market. And they’ll never going back to the stock market again. They figure it out, like I always believe, that the stock market’s risk. And you and I are not big enough or poor enough to get notified right before everything else turns to crap. So, in fact, you and I are the ones they are manipulating. They are taking our money. They are playing us. And I just don’t believe. I believe that the stock market is just flat out gambling. Just gambling, unless you have insider information, which is illegal, so. And then, if you don’t have money in those kind of things, then you’ve got to sitting around in a bank CD for less than 1%, so my average lenders are between 65 and 85 years old, probably the job that they had, where they made money, probably doesn’t exist anymore. They hate the stock market, they never going back and they figure out they can’t live off less than 1% on their money. Sure, inflation’s over 3%, you don’t even have to have a calculator and go to the store and buy a pound of hamburger or a loaf of bread or you know, half a pound of sugar, to figure out that inflation’s over 3%. You don’t even have to calculator, you can do it in your head, “Well, that’s over 3% from the last time I was down here, you know”. It means, [INAUDIBLE] and overheads getting hugely expensive, I noticed it, kind of makes you wanna worried. CPAs, how about attorneys, do you think attorneys a first lien position and how they gonna get paid or how they’ll gonna get paid, or how they’ll gonna take your house, if you don’t pay them, and you think, they’re worried over the legal system of getting the house from you, they’re not worry at all. They’ll understand you in a heartbeat. And there’s a way to build cash buyer’s list that you can also solicit too for private money. And the list goes on and on, the point is, if you get serious, about raising private money, which I believe in real estate business should be, because there’s not a genre, in the creative real estate arena that doesn’t depend on private money, ultimately someone’s gonna raise their hand, “Well, I take houses substitute and you don’t need money to do those”. Well, you do need money, I mean, you got to make back payments, you got to put them in some kind of repair most of the time, I mean sometimes, you gotta give them, you got to give the person in the house some kind of money so they can go down the road and they can get some place else. I mean, you know, it is possible in the subject-to-game to find some houses you don’t really need to put up much money but the chances of you finding a subject-to, you don’t really need any money, is pretty tough. All the other genres, you do need the money, and so, let us just cut to the chase, everyone out there needs private money, I don’t care who you are. And you are not addressing it, if you are not addressing it, then start addressing it, ‘because the sooner you find the private money, the sooner you are on the path to be in well way wealthier that you are right now, I don’t care what your number is, if you are doing it without private money, and now you are gonna find private money, your world’s gonna change. And so, I like to throw my hat in the ring, and if you wanna learn how to do it, and have someone keep you responsible, I mean, I raise my hand and then ask to be considered. But, whether you pick me or if you pick someone else, it doesn’t matter, just get it done. I mean, it should be like a year like commitment, and you should have your arms completely around it and you should found some success. I like to tell people you know, I get people lined up, I found, “Here’s your job, your job is to tell me how fast, how many people are you gonna call on a week, so that we can get through 50 No’s. I want you to go out and get 50 No’s. I want you to learn my presentation. I want you to learn exactly how to do it. You should be able to do it on a napkin or a blank piece of paper and a pencil, within 7 minutes. If the whole thing is 7 minutes long, you should be able to do it, you should practice it in front of the mirror for a couple of times so you can, you know. Practice it to yourself 20 times in a row, and by the time you do that, you can say it backwards and forwards in yourself. Go out there and am gonna challenge you to get 50 No’s in a row, and I bet you can’t do it. And the reason why you won’t be able to do it is, if you actually or shooting for 50 and you are committed and you’ll gonna get to 50 No’s, someone’s gonna say yes, someone’s gonna say yes, it’s a numbers game, it is like anything else, it is a numbers game, but you know, I hear a lot of people say,” You know what, I just really haven’t been able to find private money, Mitch”. And I said, “Really”? “You know, I want you to be completely honest with me, how many people have you gone out to and talk to about private money”? “Well, you know—“. “Yeah, I know, none right? You haven’t talked to anybody. Or maybe you mentioned it your grandma, about 8 months ago, and know you are telling me you just can’t find anybody”. Of course, horse duty, you know, that’s horse duty, how can you expect to get private money if you don’t wanna talk to anybody, the reason why you are not talking to anybody is you don’t believe in your presentation. You gotta believe in your presentation. So, get a presentation that’s a proven winner, then learn it and go out and start making appointments, then you don’t need to know these people, and stop begging people for money. You are really out there to helping people, there’s 8% or 9% of return or 10%, it is really a fantastic rate of return given the minimal risk that we are offering in this game. I mean, I average 52% LPV that means, if the owner financed value of the house is $100,000. I am borrowing $52,000 on average to pick up that house, now a lot of people say, “We can’t do that in my market”. Well, let me tell you. I’ve got people on my market that say it can’t be done. And I did a 100 times, in 2015, and I’ll do it, you know 75 or 77 times in 2016, don’t tell me you can’t find bargain houses. It’s been just a really competitive market. Gurus are coming to town every week. Real Estate clubs opening and proliferating, we’ve got 3 of them here in my town, at least. You know, everybody who watches HDTV’s Flip or whatever, thinks they’re a house flipper by the end of two weeks episodes, you know, but, that doesn’t bother me, I just go out and get houses. Last but not least, and am leaving you with this. If you were waiting to have the money before you go find deals, then you got it all backwards, and then again, it’s the deals that brings the money. Go find the deal. If you can’t find the money yourself then get a wholesale buyer right behind you, so that right before your contract expires at least you can just wholesale your contract to someone and makes some money. But, that’s in the event that you don’t find the private money in time before your contract runs out. You know the other part of it is, you have to learn how to write an effective contract, and you have to learn how to negotiate, great deals on bargain properties, and with that being said, my friends, if you don’t have all the private money you want, make a commitment to get it. It will change your life, this is Mitch. Am glad you took the time to listen to this, ’cause it’s really really an important key in the creative real estate investing business. The art of finding private money, will never ever ever valuable than it is now, and it is a life changer. Alright, im out. Have a great day.